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Double taxation

7th Aug 2023

Double taxation is the levying tax on the same income by two or more countries (tax offices).

Whether you were employed and had income from your work, received capital gains or income from financial transactions, they can still be an object of double taxation. That is why some countries have signed an agreement to avoid double taxation.

Mostly, this situation can happen, if:

  • you live in one country and work in another,
  • you have retired to another country from where you are receiving pension,
  • you live and work in the same country, but also have an income from another one.

You can check here whether your country of residence has an agreement with the country from which you received your income.

Taxation rates

Even if both countries have signed an agreement, there can be a difference between the tax rates. In addition, there can be a different tax rate for residents and non-residents.

For example:

Jacek is from Poland and worked for the whole year in Ireland. Now he is considered a tax resident of Ireland because he stayed there for more than 183 days per calendar year. The standard tax rate in Ireland for individuals is 20%. But if he will be in Poland, he will pay less taxes, because the tax rate is 17% for income up to 85 529 PLN. Hopefully, Ireland has an agreement with Poland, so Jacek doesn’t need to pay double taxes in both countries. He can file a tax return in Ireland and receive his overpayment back.

But there is another important point - tax allowances. If you are considered as a resident of that country, you may be entitled to receive tax bonuses such as child benefit and other.

Workers abroad

Another common situation is when a worker is posted to work abroad from his company. You may not need to pay a taxes in that country if:

  • you stayed there less than 6 months and
  • you received a salary directly from your employer in the country of residence.

For example

Andrea is from the Czech Republic and is currently working in TheCompanyName sro. Her employer sent her to work for 5 months in this company’s other office located in Belgium. She received her salary as always, directly from the employer in the Czech Republic even for the time she stayed in Belgium. She worked there for less than 183 days per year so she will still be a tax resident of the Czech Republic.

Performers and sport professionals

Unlike all other situations, artists mostly have a special law according to which they need to pay taxes in the country where they earned money. It is called a foreign tax and is also a subject to discuss. To avoid double taxation in your home country, your promoter should provide you with the confirmation of paid taxes from that specific country. Even so, it might not be enough and you will need to pay taxes for the same income in your country of residence.

Read also:

Pension contributions in Austria. Am I eligible to receive it, if I don’t work there anymore?

While working in Austria, you pay taxes monthly, including a social security tax.

Pension contributions

Pension abroad

If you retire to another country and stay there for more than 6 months per year, you will become a tax resident and will be required to pay taxes there. Most EU countries do have an agreement, but check the agreements between the two countries to be sure.

You are not an EU resident and you have worked in Austria? Check, if you are eligible to receive a pension contribution.

As you can see, the issue of the double taxation system is rather complicated and may need a consultation with a tax advisor. Fill in the request so our tax consultant can help you.

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